Whistleblower Settles Tax Fraud Case & Receives $11.6 Million

A whistleblower who wishes to remain anonymous has received a $11.6 million reward under the Internal Revenue Service’s (IRS) whistleblower award program.

The whistleblower’s work translated into tens of millions of dollars recovered by the US Treasury.

“The good news is the IRS Whistleblower Office continues to show a willingness to make major awards to individuals who come forward and speak out against tax evasion,” said Stephen Kohn, one of the whistleblower’s lawyers. “There is no question that whistleblowers need to be patient – but today’s award is an important step in bolstering confidence in the IRS whistleblower program. There are still steps and hurdles for the IRS whistleblower program – but this is an important day for the continued success of the IRS whistleblower program.”

Another of the whistleblower’s lawyers — Dean Zerbe — said the award “shows the IRS recognizes that the whistleblower program is a key part of IRS efforts to go after tax fraud and tax evasion.”

“However, the IRS is only scratching the surface of the potential role whistleblowers can play in collecting tax from big-time tax cheats. The IRS has a strong interest in hearing from – and rewarding — whistleblowers who know about tax cheats. From conversations I have had with senior IRS officials, the IRS is especially interested in hearing from whistleblowers who know details about the latest corporate tax shelters as well as informed whistleblowers who have knowledge about US taxpayers with illegal offshore accounts around the world – especially Hong Kong, Singapore and Central America.”

But Patrick Burns of Taxpayers Against Fraud said that “it’s hard to celebrate this one win knowing how many other great cases are spinning in the backlog.”

“The good news is that over 55,000 claims, each putatively worth more than $2 million in delinquent taxes, have been filed with the IRS whistleblower office in the last 8 years,” Burns said.

“The bad news is that the IRS has settled fewer than 15 cases in that same period of time – and that includes the case settled this week. The problem is not that whistleblowers are not coming forward with terrific information; it’s that the IRS is dropping the ball.”

“At a time when Congress is hammering the Service around the head, you would think the agency would be focused on changing the storyboard, but so far that has not happened.”

“Is this settlement a sign of good things to come? We can hope so, but I am keeping my expectations low. Better to be surprised than disappointed again.”

Kohn and Zerbe represent jointly a number of whistleblowers – including Brad Birkenfeld, the UBS whistleblower who received an award of $104 million dollars from the IRS – the largest amount ever paid to a single whistleblower.